Unemployment rate holds steady at 9.5 percent

ECONOMY

Tom Abate, Chronicle Staff Writer

Published 4:00 am, Saturday, August 7, 2010

Photo: Charles Dharapak, AP

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FILE - In this Feb. 11, 2010 file photo, Council of Economic Advisers Chair Christina Romer briefs reporters at the White House in Washington. The White House on Thursday, Aug. 5, 2010 said that Romer is resigning her position to return to academia. Her resignation will take effect Sept. 3. (AP Photo/Charles Dharapak, File)
Ran on: 08-07-2010
Christina Romer, chairwoman of the Council of Economic Advisers, is returning to UC Berkeley.
Ran on: 09-03-2010
Christina Romer said this was &quo;not my father's recession.&quo; You can read her full National Press Club speech at http:--sfg.ly-8Y8Jnb.
Ran on: 09-03-2010
Christina Romer said this was &quo;not my father's recession.&quo; You can read her full National Press Club speech at http:--sfg.ly-8Y8Jnb. less

FILE - In this Feb. 11, 2010 file photo, Council of Economic Advisers Chair Christina Romer briefs reporters at the White House in Washington. The White House on Thursday, Aug. 5, 2010 said that Romer is ... more

Photo: Charles Dharapak, AP

Unemployment rate holds steady at 9.5 percent

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The United States lost 131,000 jobs in July, but the unemployment rate held steady at 9.5 percent as many Americans gave up looking for work, the Labor Department said Friday.

The weak report, along with data showing a continuing decline in credit card purchases, suggest that the consumer-driven U.S. economy is slowing in a way that threatens to undermine the recovery.

"A double dip (recession) is not likely, but not out of the question," said Sung Wohn Sohn, an economics professor at California State University Channel Islands.

Economist Nigel Gault from IHS Global Insight found a few positives in Friday's report. The average workweek increased one hour. Average earnings rose 4 cents to $22.59 per hour. These data indicate that the economy is still growing, just not fast enough to put 14.6 million jobless Americans back to work.

Sylvia Allegretto, an economist with the Institute for Research on Labor and Employment at UC Berkeley, noted that the economy has lost nearly 8 million jobs since the recession began, and 10 percent of those losses have occurred in California.

An Associated Press analysis of federal data suggests that the economy is creating not just fewer jobs but poorer jobs.

So far this year, the economy has created 117,000 high-paying jobs in fields such as construction, manufacturing, engineering and law, compared with 513,000 jobs for service-sector occupations like $9-per-hour cashiers and $13-per-hour hair dressers, AP reported.

With midterm congressional elections coming in November, the White House has been defending its economic record by arguing that its stimulus program prevented the mess that it inherited from the Bush administration from plunging the world into a second depression.

House Minority Leader John Boehner, R-Ohio, belittled Democratic spending programs "that have led to fewer jobs and more debt," and put pressure on Obama to extend the Bush-era tax cuts for high-income Americans, a category that includes many small-business owners.

The U.S. jobs deficit is stunning. Economists at the Brookings Institution said Friday that if the United States started adding about 200,000 jobs per month, it would take 11 1/2 years to bring total employment, as a fraction of the working-age population, back to where it stood before the recession.

The experts are divided about how to respond to these challenges, said Mark Zandi, chief economist with Moody's Economy.com.

He endorsed Democratic programs like the $34 billion extension of unemployment benefits and the proposed $26 billion in federal aid to save state jobs as measures that would pump important sums into the U.S. economy.

But Zandi agreed with Republicans that now is the wrong time to raise taxes on high-income earners as Obama has suggested will be necessary to fight the federal budget deficit.

Friday's report coincided with the resignation of Christina Romer, chairwoman of Obama'sCouncil of Economic Advisers. The former UC Berkeley professor said she wanted to return to teaching, and friends said the Romers - her husband, David, is also a UC Berkeley economics professor - want their teenage son to attend high school in the Bay Area.

But Romer has also been the target of Republican ridicule for her prediction early in the administration that the stimulus program would keep unemployment below 8 percent.

More recently, Republicans cited an economics paper that she co-authored with her husband as vindicating the GOP contention that ending Bush-era tax cuts would dampen economic activity.

Romer has defended her stimulus position by saying the economy was worse than had been imagined before Obama took office, and said her tax paper did not oppose a tax increase for top earners.

Romer has been mentioned as a possible replacement for San Francisco Federal Reserve President Janet Yellen, who has been tapped to become vice-chairman of the Federal Reserve in Washington.

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